Bureau of Industry and Security (BIS)
- On June 8, BIS entered into a Settlement Agreement with Axis Communications, Inc. of Massachusetts to settle charges of 15 alleged violations of the Export Administration Regulations (EAR). The company was assessed a $700,000 civil penalty and directed to conduct an external audit of its export compliance program by an unaffiliated third-party consultant.
- Between 2011 and 2013, the company exported thermal imaging cameras to Mexico without a license on 13 occasions. The cameras were valued at nearly $400,000. BIS also alleged Axis failed to comply with recordkeeping requirements in connection with the shipments.
- On June 9, BIS entered into a Settlement Agreement with Cryomech, Inc. of New York for one alleged violation of the EAR. The company was assessed a $28,000 civil penalty and directed to conduct an external audit of its export compliance program by an unaffiliated third-party consultant.
- In 2012, Cryomech made an unlicensed export of an LNP-20 Liquid Nitrogen Plant to a party in Russia on the Entity List.
- On June 27, BIS entered into a Settlement Agreement with Hassan Zafari of Brentwood, California, to settle one alleged violation of the EAR. Mr. Zafari was assessed a $52,500 civil penalty (with all but $7,500 suspended, pending a two-year probationary period) and is subject to a two-year denial order; he may not participate in the export of any item from the U.S. during this time.
- He caused, aided, or abetted the export from the U.S. to Iran of a used industrial laser system without the required license. According to the Charging Letter, among other things, Zafari admitted to BIS special agents during an interview that he knew that U.S. law prohibited exports to Iran, directly or indirectly, but he “[n]onetheless . . . took several actions that facilitated the transaction, including identifying and hiring a freight forwarding company to ship the laser system from the United States to a general trading company in Dubai, UAE, and instructing the forwarder to list the UAE general trading company as the consignee while aware. . . that the item actually was intended for supply, transshipment, or re-export to Iran.”
Office of Foreign Assets Control (OFAC)
- On June 8, OFAC announced American Honda Finance Corporation (AHFC) agreed to remit $87,255 to settle its potential civil liability for 13 alleged violations of the Cuban Assets Control Regulations (CACR).
- Between 2011 and 2014, Honda Canada Finance, Inc. a majority-owned subsidiary of AHFC located in Canada, approved and financed 13 lease agreements between an unaffiliated Honda dealership in Ottawa, Canada and the Embassy of Cuba in connection with the Cuban Embassy’s leasing of vehicles.
- On June 26, OFAC announced American International Group agreed to remit $148,698 to settle its potential civil liability for 555 alleged violations of sanctions regulations covering Iran, Sudan, Cuba, and the Weapons of Mass Destruction program.
- From 2007 to 2012, AIG engaged in transactions totaling approximately $396,530 in premiums and claims for the insurance of maritime shipments of various goods and materials destined for, or that transited through, Iran, Sudan, or Cuba, and/or that involved a blocked person.
- Although AIG had in many cases included OFAC’s recommended exclusion clauses (see OFAC FAQs 102 and 103), some failed to include them, and other policies “were too narrow in their scope and application” for the clauses to be effective.
Department of Justice
On June 16, the Department of Justice publicly disclosed another declination under its Foreign Corrupt Practices Act pilot program. This is the sixth public declination by the Department since launching the program in April 2016. It also represents the first public declination since the Department announced the temporary extension of the pilot program on March 10, 2017, and the first under the Trump administration.
For details on the new declination, please see Crowell & Moring’s Client Alert.